The unfortunately all-too-common combination of a troublesome client and the cool recessionary winds have forced Parnell indie agency Brave New World to shut up shop. But it hopes to go out in a blaze of glory and highlight a serious issue with shelf companies that the agency's general manager David Brash believes is currently going under the radar of the authorities.
"There's been one client that's basically drained our cash flow," says Brash.
He says Brave New World is owed more than $200,000 by Australian company What Green Solutions, which makes the Green Clean product, and they just couldn't put any more money in to keep it afloat. Five people will lose their jobs as a result of the closure. Its 'sister company' Touchpoint is totally separate and will be unaffected.
As well as the deleterious effects of a "rogue client that left the country" (Brash says the warehouse is now empty and the remaining product has been sent back to Australia), the generally unfavourable economic conditions have also hampered any efforts to climb out of the mire.
"It's dog eat dog out there. There's no doubt about that," he says. "The days when there were an abundance of clients are over. And small companies are finding it tough, especially when their clients don't pay."
He says a case is continuing at the Auckland High Court and he claims MediaWorks Radio, The Radio Network and PMP Distribution are also out of pocket. Brash isn't particularly happy with the way the court system has performed so far, because he says this is the fourth time the issue has been taken to the High Court and What Green Solutions has been held in contempt on two of those occasions.
Through it all, it appears as though What Green continued to make major media commitments that it had no intention of paying. Brash has laid a formal complaint with the Serious Fraud Office (SFO) as a result. Usually the threshold for SFO investigations is $2 million and the amount owed is well under this. But Brash wanted to highlight what he sees as a major issue that's falling under the radar of the authorities: foreign companies setting up shelf companies in New Zealand (What Green Solutions NZ limited was a subsidiary of What Green Solutions Australia) and then, once the market has been tested or the product has failed, pulling out and leaving a trail of destruction behind them.
Before deciding to do business with What Green, he says Brave New World looked at the Australian company's payment history, which was good. And it assumed it would be just as reliable in New Zealand.
It will take months for the SFO to trawl through the many thousands of emails, he says, and while it would be a hollow victory if (and he emphasises if) What Green solutions is found to be in breach, he says it would vindicate the company's concerns about the perils of shelf companies and hopefully draw attention to the issue. Still, one of the issues is that because it's based overseas, it makes it much more difficult to prosecute.
Brave New World commenced trading in May 2000 and grew significantly with the subsequent buy-out of Dave Clark Design Associates (not to be confused with Dave Clark Design, which, strangely, was started up by Dave Clark not long after). At one time it had 30 staff, but in recent years the agency's size has reduced considerably.
Sadly—and unfairly, it appears—the doors will shut on the 30 September.